Chapter 11

Managing People for Service Advantage

Frontline Service Personnel: Source of Customer Loyalty and Competitive Advantage Frontline is an important source of
differentiation and competitive advantage. It is:
a core part of the product the service firm the brand

Frontline also drives customer loyalty, with employees playing key role in anticipating customer needs, customizing service delivery and building personalized relationships

Boundary Spanning Roles

Boundary spanners link the inside of the organization to the outside world Multiplicity of roles often results in service staff having to pursue both operational and marketing goals Consider management expectations of restaurant servers:
deliver a highly satisfying dining experience to their customers be fast and efficient at executing operational task of serving customers do selling and cross selling, e.g. We have some nice desserts to follow your main course

Role Stress in the Frontline

3 main causes of role stress:

Person vs. Role: Conflicts between what jobs require and

employees own personality and beliefs

Organization vs. Customer: Dilemma whether to follow

company rules or to satisfy customer demands

Customer vs. Customer: Conflicts between customers that

demand service staff intervention

Emotional Labor
The act of expressing socially desired emotions during service transactions (Hochschild, The Managed Heart) Three approaches used by employees
surface acting deep acting spontaneous response

Performing emotional labor in response to societys or managements display rules can be stressful Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress

The Cycles of Failure, Mediocrity and Success

Too many managers make short-sighted assumptions about financial implications of:
Low pay Low investment (recruitment, training) High turnover human resource strategies

Often costs of short-sighted policies are ignored:

Costs of constant recruiting, hiring & training Lower productivity & lower sales of new workers Costs of disruptions to a service while a job remains unfilled Loss of departing persons knowledge of business and customers Cost of dissatisfied customers

Cycle of Failure (Fig. 11.1)

Customer turnover Repeat emphasis on attracting new customers Failure to develop customer loyalty

Low profit margins

High employee turnover; poor service quality No continuity in relationship for customer

Narrow design of jobs to accommodate low skill level

Employee dissatisfaction; poor service attitude

Use of technology to control quality

Emphasis on rules rather than service Payment of low wages

Customer dissatisfaction

Employees become bored Employees cant respond to customer problems Minimization of training

Minimization of selection effort

Source: Schlesinger and Heskett

Service Sabotage (Fig. 11-A)

Routinized

Openness of Service Sabotage Behaviors

Covert Overt

Normality of Service Sabotage Behaviors

Customary-Private Service Sabotage e.g. Waiters serving smaller servings, bad beer or sour wine

Customer-Public Service Sabotage

e.g. Talking to guests like young kids and putting them down

Sporadic-Private Service Sabotage e.g. Chef occasionally purposefully slowing down orders

Sporadic-Public Service Sabotage e.g. Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someones hands

Intermittent

Cycle of Mediocrity (Fig. 11.2)

Other suppliers (if any) seen as equally poor Customers trade horror stories Employees spend working life in environment of mediocrity Narrow design of jobs No incentive for cooperative relationship to obtain better service Complaints met by indifference or hostility Training emphasizes learning rules

Employee dissatisfaction (but cant easily quit)

Emphasis on rules vs. pleasing customers

Success = not making mistakes Service not focused on customers needs

Jobs are boring and repetitive; employees unresponsive Resentment at inflexibility and lack of employee initiative; complaints to employees E Promotion and pay increases based on longevity, lack of mistakes

Good wages/benefits high job security

Initiative is discouraged

Customer dissatisfaction

Cycle of Success (Fig. 11.3)

Low customer turnover Repeat emphasis on customer loyalty and retention Customer loyalty

Higher profit margins

Lowered turnover, high service quality Continuity in relationship with customer Employee satisfaction, positive service attitude

Broadened job designs

Train, empower frontline personnel to control quality

High customer satisfaction

Extensive training

Above average wages Intensified selection effort

Source: Heskett and Schlesinger

How to Manage People for Service Advantage?

Staff performance is a function of both ability and motivation. How can we get able service employees who are motivated to productively deliver service excellence?

1. Hire the right people

2. Enable your people

3. Motivate and energize your people

Hire the Right People

The old saying People are your most important asset is wrong. The RIGHT people are your most most important asset.

Jim Collins

Recruitment
The right people are a firms most important asset: take a focused, marketing-like approach to recruitment Clarify what must be hired versus what can be taught Clarify nature of the working environment, corporate values and style, in addition to job specs Ensure candidates have/can obtain needed

Select And Hire the Right People: (1) Be the Preferred Employer
Create a large pool: Compete for Talent Market Share What determines a firms applicant pool?
Positive image in the community as place to work Quality of its services The firms perceived status

There is no perfect employee

Different jobs are best filled by people with different

skills, styles or

personalities

Hire candidates that fit firms core values and culture

Select and Hire the Right People: (2) How to Identify the Best Candidates Observe Behavior
Hire based on observed behavior, not words you hear
Best predictor of future behavior is past behavior Consider group hiring sessions where candidates

given group tasks

Personality Testing
Willingness to treat co-workers and customers with

courtesy, consideration and tact

Perceptiveness regarding customer needs Ability to communicate accurately and pleasantly

Select and Hire the Right People: (3) How to Identify the Best Candidates Employ Multiple, Structured Interviews

Use structured interviews built around job requirements

Use more than one interviewer to reduce similar to me effects

Chance to have hands-on with the job Assess how the candidates respond to job realities Allow candidates to self select themselves out of the job

Give Applicants a Realistic Preview of the Job

Train Service Employees

The Organizational Culture, Purpose and Strategy
Promote core values, get emotional commitment to strategy Get managers to teach why, what and how of job.

Interpersonal and Technical Skills

Both are necessary but neither is sufficient for optimal job performance

Product/Service Knowledge

 Firms strategy is based on competitive differentiation and on personalized, customized service Emphasis on long-term relationships vs. one-time transactions Use of complex and non-routine technologies Environment is unpredictable, contains surprises Managers are comfortable letting employees work independently for benefit of firm and customers Employees seek to deepen skills, like working with others, and are good at group processes

Factors Favoring Employee Empowerment

Control concentrates 4 key features at top of organization; Involvement pushes them down:

Control vs. Involvement Model of Management

Information about operating results and measures of competitive performance

Rewards based on organizational performance (e.g. profit sharing, stock ownership)

Knowledge/skills enabling employees to understand and contribute to organizational performance

Power to influence work procedures and

Levels of Employee Involvement

Suggestion involvement

Employee recommendation

Job involvement

Jobs redesigned Employees retrained Supervisors facilitate

High involvement

Information is shared Employees skilled in

Motivate and Energize the Frontline

Use the full range of available rewards effectively, including:

Job content Feedback and recognition Goal accomplishment

The Inverted Organizational Pyramid (Fig. 11.5)

Customer Base Top Mgmt Middle Mgmt Frontline Staff Frontline Staff

Middle Mgmt & Top Mgmt Support Frontline Inverted Pyramid with a Customer & Frontline Focus

Traditional Organizational Pyramid

Legend: = Service encounters, or Moments of Truth.

Leadership that:

The Wheel of Successful HR in Service Firms (Fig. 11.6)

1. Hire the Right People
Be the preferred employer & compete for talent market share Intensify the selection process

Focuses the entire organization on supporting the frontline Fosters a strong service culture with passion for service and productivity Drives values that inspire, energize and guide service providers

3. Motivate & Energize Your People

Utilize the full range of rewards

Service Excellence & Productivity 2. Enable Your People

Empower Frontline Build high performance service delivery teams Extensive Training